Launceston — How much of the current surge in thermal coal prices in Asia is because of a fundamental shift in the supply-demand balance, and how much is down to speculative froth? This is a question often asked when a commodity experiences a strong gain — or drop — in price, especially when the fundamentals don’t appear to have shifted that much, at least on a casual view. Virtually everybody in the coal industry can agree that the strong performance in seaborne thermal coal this year is being driven by market dynamics in top importer China. What’s harder to work out is whether this rally will run out of steam or whether there has been a structural change in the market. The argument for a structural change in China is quite compelling. It goes a long way towards justifying some of the explosive 43.2% rally in spot cargoes from Australia’s Newcastle port in the past three months. The price has risen from the low so far this year of $71.30 a tonne on May 16 to end at $102.10 on Augus...

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